Goldman Sachs Group Inc. executed its first over-the-counter crypto options trade, a further step in its expansion of digital-asset offerings to Wall Street investors.
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The bank traded a non-deliverable Bitcoin option, a derivative tied to Bitcoin’s price that pays out in cash, in a transaction facilitated by Galaxy Digital Holdings Ltd., a crypto financial-services firm. Options are used by crypto investors to hedge risks or boost yields, and over-the-counter transactions are typically larger trades negotiated privately.
The move marks the first such transaction by a major bank in the U.S., Galaxy said. It expects the trade to “open the door for other banks considering OTC as a conduit for trading digital assets,” Damien Vanderwilt, co-president and head of global markets at Galaxy, said in a statement.
For years after its creation in 2009, Bitcoin was shunned by Wall Street banks. Large banks still aren’t active in the crypto spot market, handicapped by regulatory uncertainty and “know your customer” rules. But some banks, including Goldman, are exploring more crypto derivatives trading, Bloomberg News has reported.
“This is an important development in our digital assets capabilities and for the broader evolution of the asset class,” Max Minton, Goldman’s Asia Pacific head of digital assets, said in the statement.
Last year, Goldman opened up trading of non-deliverable forwards, a derivative tied to Bitcoin’s price that settles in cash. It also offers exchange-listed options and futures trading in Bitcoin and Ether.
Galaxy also provided liquidity for Goldman’s first CME Bitcoin futures trade last year.